Gopinath said Air Deccan initially rejected Mallya’s offer since the merger of a full service airline and low cost carrier had never worked successfully anywhere in the world. “I mistook him. Mallya came back and said he wants to invest and he would make the best offer. If we would have gone with any others, there would have been bloodbath in the markets,” he remarked.

“It makes enormous financial and economic sense and in the interest of long-term vision and synergy that can evolve with Kingfisher in terms of engineering, inventory management and ground handling resources, it was the best option before Air Deccan,” Gopinath said.

“Starting next Monday, a team of officials from Air Deccan and Kingfisher Airlines will look at ways to collaborate and combine to increase operational efficiency and decrease costs,” he said.

Air Deccan began operations in August 2003. It recorded a net loss of Rs 213.17 crore on revenue of Rs 437.82 crore for 2006-2007. The company raised nearly Rs 400 crore through an initial public offer (IPO) in May 2006.